[OPEN-ILS-GENERAL] Details of fiscal sponsorship agreement for Evergreen & Conservancy

[Lori Bowen Ayre]

I am in favor of moving forward with the Software Freedom Conservancy
membership to protect our Evergreen assets under their umbrella 501(c)3.  I
suggest we appoint an interim contact person (or two).

Over all of our discussions in the Governance Committee, I have seen nothing
but benefit from this approach.  If there are any drawbacks to using the
SFC,  this needs to be brought to our attention now.

I would love to hear from others to ensure we have community buy-in. Just a
"hear hear" or a ++ would be nice so we know people are aware of the plan.

If there are no objections (and even if no one responds affirmatively)  I
think we should feel free to move forward with membership in the SFC at the
next opportunity.

Lori Ayre


On Wed, Nov 10, 2010 at 8:24 AM, Dan Scott <dan at coffeecode.net> wrote:

> The Conservancy has added one new member organization since we
> received the draft agreement, and it's not us!
> (http://sfconservancy.org/news/2010/nov/10/pypy-joins/).
>
> Based on the lack of comments, I'm wondering if anyone has looked at
> the Software Freedom Conservancy draft agreement that I posted to the
> open-ils-general list on October 21? At the time, I had suggested that
> we try to collect a list of questions together by October 28th, a date
> that has come and gone.
>
> On the governance list, we've been doing some soul-searching about
> whether to establish a small, focused foundation or a very broad
> foundation. In principle, I'm not opposed to a foundation that
> includes a users' group, various committees, membership fees, etc, but
> I worry that getting it right will take a long time - and when dealing
> with a scope that broad, I would much rather get things right and take
> a long time, than get things done fast but fatally flawed at the
> outset.
>
> However, we don't have to exist in the mean time without the benefit
> of being part of a 501(c)(3); based on the draft agreement, the
> relationship with the Conservancy can be as lightweight as a temporary
> home that we can leave in 60 days if another 501(c)(3) can receive the
> assets. I've checked with Bradley Kuhn to ensure that would be okay,
> and he said "I really don't get why people don't just use as that:
> Keep debating the other issues while having a Conservancy membership,
> and even move in forming the new org in parallel."
>
> So, based on that, would it be possible to move forward on the
> governance front in two tracks?
>
> 1) Short-term (e.g. next month?): establish an agreement with the
> Conservancy that enables us to take advantage of the benefits of being
> part of a 501(c)(3) and provides a neutral place for holding the
> Evergreen collateral (trademarks, logos, domain names...). We would
> work directly with the Conservancy to establish the ground rules for
> our agreement (as Bradley offered when he sent us the sponsorship
> agreement - and which we have not as of yet used).  Some projects
> simply nominate one person to act as the point of contact with the
> Conservancy; it could be as simple as that. If we get set up before
> the end of year, then Americans would be able to make tax-free
> donations to Evergreen as a Christmas present!
>
> 2) Longer-term (e.g. in time for the next Evergreen Conference):
> establish the complete set of rules of governance, including standing
> committees, membership rules & fees, meeting rules, compensation,
> possibly setting up a standalone 501(c)(3)?
>
> Dan
>
> On 21 October 2010 17:00, Dan Scott <dan at coffeecode.net> wrote:
> > Please find below the explanation of and attached PDF & Tex documents
> > concerning the Evergreen / Software Freedom Conservancy agreement that
> > we will need to sign in order to move forward with establishing the
> > Evergreen Software Foundation as a member project of the Software
> > Freedom Conservancy.
> >
> > In recognition of Bradley's time, I recommend that we discuss the
> > agreement on the list, and compile a list of questions that come up
> > during the course of the discussion. Perhaps we can try to pull together
> > any major questions by the end of next week (Friday, October 28th)?
> >
> > ----- Forwarded message from "Bradley M. Kuhn" <bkuhn at sfconservancy.org>
> -----
> >
> > Date: Thu, 21 Oct 2010 08:32:17 -0700
> > From: "Bradley M. Kuhn" <bkuhn at sfconservancy.org>
> > To: Dan Scott <dan at coffeecode.net>
> > Subject: Details of fiscal sponsorship agreement for Evergreen &
> Conservancy
> > User-Agent: Gnus/5.13 (Gnus v5.13) Emacs/23.1 (gnu/linux)
> >
> > I'm glad that you are considering joining the Conservancy and I am
> > pleased to extend an invitation to Evergreen.  Attached is a draft of
> > the fiscal sponsorship agreement that representatives of Evergreen will
> > need to sign in order to join the Conservancy.  (Both LaTeX source and
> > PDF are included.) Please read this agreement and share and discuss it
> > with all of the key people involved in Evergreen.
> >
> > As mentioned in my previous email, generally, we leave it for the
> > Evergreen community to decide how you'd like to discuss the document, as
> > signing such an agreement is a big step for the project and you should
> > consider the agreement in whatever forum is most appropriate for your
> > community.  I'm happy to answer questions from the community as you
> > consider the document, and you should feel comfortable cc'ing me on any
> > threads you think I should comment on.  (However, before doing so,
> > please make sure I can post back to any lists included in the Cc without
> > being formally subscribed.)  Meanwhile, you are also welcome to batch
> > questions into one group as well and email them to me directly, and just
> > repost my responses.  Basically, whatever works well for you works fine
> > for me.
> >
> > I strongly suggest that you share the agreement draft as wide as
> > possible throughout the community, and make sure anyone who has ever
> > been a serious contributor to the project in the past or currently is
> > made aware of your plans to join Conservancy.  We very much rely on you
> > to make sure that your entire community is in agreement with joining
> > Conservancy, so please make efforts to be sure everyone has had their
> > say.
> >
> >
> > Regarding the agreement, some of the more complex provisions of the
> > agreement reflect the special considerations necessary to support the
> > Conservancy's tax exempt status.  However, on the whole, I believe that
> > this agreement fairly and clearly sets out an advantageous relationship
> > for the Conservancy's member projects.  As some of the paragraphs
> > specifically indicate, the agreement can be tailored to reflect
> > Evergreen's particular needs.  To help you in your review, below is a
> > section-by-section walk through, giving an explanation of the
> > significance of each provision.  If there are any sections that seem
> > confusing or that you feel should be changed to reflect Evergreen's
> > needs, please let me know and we can discuss them.
> >
> >
> > Introductory Paragraph
> >
> > This paragraph identifies the parties to the contract.  It's more
> > thoroughly explained in paragraph 6, but the point of this paragraph is
> > to name the people who sign the agreement.
> >
> > Recitals (the "WHEREAS" section)
> >
> > These paragraphs set forth the basic understandings of the parties.
> > Similar to the "preamble" found in the GPL and other Free Software
> > licenses, these are *not* operative provisions of the document.
> > Instead, they give the context of the agreement.
> >
> > In this specific case, the key points of understanding are that the
> > purpose of Evergreen is to forward Free, Libre and Open Source Software
> > (FLOSS) and that both the Conservancy and Evergreen want Evergreen to
> > join the Conservancy.  The Conservancy's mission (and charitable
> > purpose) is to advance only FLOSS development, documentation, and usage,
> > so it is important that this context be stated clearly.
> >
> > Paragraph 1 - Term of Agreement
> >
> > This paragraph says that Evergreen is part of the Conservancy as of the
> > signing date of the agreement.  It cross references the terminations
> > provisions in paragraph 7 (which is explained in greater detail below).
> > Note, though, that Evergreen can choose to leave the Conservancy at any
> > time.
> >
> > Paragraph 2 - Project Management and Activities
> >
> > a) Both parties agree that Evergreen will be FLOSS.  As noted above,
> >   this is the fundamental goal and charitable purpose of the
> >   Conservancy.  The Conservancy will not and cannot sponsor proprietary
> >   projects.
> >
> > b) This clearly sets out the limits of the Conservancy's management over
> >   Evergreen.  Due to requirements connected to Conservancy's tax exempt
> >   status, the ultimate legal control of the projects must be with the
> >   Conservancy.  From the IRS's perspective, the projects are part of
> >   the Conservancy, and the purpose of its tax exemption is to forward
> >   the FLOSS mission of those projects.
> >
> >   However, the Conservancy does not want to interfere with the
> >   successful software development, documentation and advocacy work
> >   already underway in member projects; such activity should continue
> >   after the agreement without interruption or interference.  This
> >   paragraph delegates some of Conservancy's legal authority back to the
> >   developers, so that Evergreen can run itself in day-to-day matters.
> >
> >   The only limitations that we must place are to prevent Evergreen from
> >   producing non-free software (as per Conservancy's charitable purpose)
> >   and from spending money or conducting activities that would
> >   jeopardize the Conservancy's tax exempt status.  All the ordinary
> >   activities of FLOSS projects come well within these limitations.
> >   Some specific activities that are restricted include lobbying
> >   activities and spending money in ways other than consistent with the
> >   charitable purposes of the Conservancy (i.e., forwarding FOSS).
> >
> >   Note that developers of Evergreen in their capacity as individuals
> >   (when not representing Evergreen still may engage in for-profit
> >   service businesses related to their FLOSS work.  The work of
> >   Evergreen itself must fit the guidelines, but individuals are free to
> >   act in their own capacity in other endeavors, as long as they clearly
> >   state that they are not acting on behalf of the project when they do
> >   so.
> >
> >   If you are ever concerned that a particular activity -- be it one
> >   carried out for Evergreen or one that an individual developer engaged
> >   in independently -- might be a problem, you can always ask the
> >   Conservancy for clarification.
> >
> > c) As discussed above in (b), this section describes the corporate
> >   relationship of the project and the Conservancy.  For clarity, it
> >   refers to section (b), which delegates the actual management of
> >   Evergreen to the relevant developers.  Conservancy, when acting as a
> >   fiscal sponsor, must have the legal authority to manage Evergreen
> >   even though section (b) delegates the day-to-day operations to the
> >   developers.
> >
> > d) This section clarifies that Evergreen can't represent the Conservancy
> >   without getting written authorization first.  If you'd like to
> >   represent the Conservancy at a conference or other such event, you
> >   can always talk to us about it.
> >
> > Paragraph 3 - No Fees
> >
> > It's just as it sounds.  The Conservancy provides services to projects
> > to benefit the FLOSS community and does demand member projects to bear
> > the overhead costs.  Projects are encouraged to make donations to the
> > Conservancy as a percentage of their funds to assist the Conservancy
> > with its operating expenses.  Please note, though, that Conservancy is
> > only able to provide its services to member projects because there is a
> > reasonably healthy general fund available.  Donations from our member
> > projects are not the only source of general fund revenue, but it is a
> > substantial component in Conservancy' sustainability plan.
> >
> > Therefore, if you choose to do so, this section provides suggested
> > wording in brackets for donating a percentage of the Project's income to
> > be used towards keeping the Conservancy up and running (10% is a very
> > common rate that many umbrella organizations require for their fiscal
> > sponsorship services).
> >
> > Paragraph 4 - Project Fund/Variance Power
> >
> > This sets out the financial structure in connection with the
> > relationship described above in paragraph 2. Conservancy will separately
> > account for Evergreen's revenue (and Evergreen will have its own bank
> > account at the Conservancy once its balance reaches $3,500).  For tax
> > purposes, Conservancy will report all of the income to Evergreen in its
> > IRS and state filings.  Evergreen therefore will not need to file any
> > separate tax documents with the IRS.  Conservancy will keep the
> > financial books for Evergreen, sending periodic reports to the project's
> > developers.
> >
> > The developers will direct the Conservancy to spend the money on behalf
> > of Evergreen within the limitations imposed by the tax laws and
> > Conservancy's 501(c)(3) mission.  Conservancy will receive any checks on
> > behalf of Evergreen, and it will also write checks on behalf of
> > Evergreen.
> >
> > Paragraph 5 - Project Fund Management/Performance of Charitable Purposes
> >
> > This paragraph clarifies that all assets will be devoted to the
> > project's purposes, as those purposes are a subset of the Conservancy's
> > purposes.  Assets cannot be used in connection with activities that
> > would jeopardize the Conservancy's tax exempt status.  As discussed
> > above, in practice, most typical expenses of FLOSS projects will come
> > well within these limitations.  Activities that are restricted include
> > lobbying activities and spending money in ways other than consistent
> > with the charitable purposes of Conservancy (i.e., forwarding FLOSS).
> >
> > Paragraph 6 - Representation of the Project in the Conservancy
> >
> > As the note in this section indicates, we understand that each project
> > will have its own management structure that it has developed to reflect
> > its size and community.  This paragraph requires that certain
> > representatives be named as the individuals that can officially
> > communicate decisions on behalf of Evergreen.  This can be a single
> > maintainer, a committee of developers or a few specified
> > representatives.
> >
> > To the extent that it makes sense for Evergreen to have a committee of
> > representatives, we should indicate how decisions can be made by that
> > committee.  For example, should all decisions be communicated to the
> > Conservancy by all members of the committee or would a simple majority
> > suffice?  Can any one representative communicate official decisions on
> > behalf of all?  Evergreen should also consider adding a mechanism here
> > for adding and removing representatives over time.  We're happy to
> > discuss methods that have worked for other projects with you to help you
> > select the solution that is right for you.
> >
> > We generally find this is the most difficult provisions for projects to
> > work out, as it does require that your project consider the form and
> > type of leadership structure it wants to have, and that structure will
> > be legally formalized in this document for perpetuity.
> >
> > Paragraph 7 - Outstanding Liabilities
> >
> > In this section, Evergreen confirms that it has told the Conservancy
> > about any liabilities that might be outstanding prior to joining the
> > Conservancy.  This gives the Conservancy some assurance that its due
> > diligence process has been complete and that the Conservancy's Board
> > received all of the information it needed to properly evaluate the
> > project.  Liabilities include, for example, financial obligations, such
> > as any debts or outstanding bills, or any legal claims that could be
> > outstanding against Evergreen.
> >
> > If you believe some liabilities exist, or that something may be a
> > liability and aren't sure, please err on the side of letting Conservancy
> > know about it.
> >
> > Paragraph 8 - Termination
> >
> > Projects can leave Conservancy at will.  This section sets out the
> > mechanisms for termination to make sure that when a project leaves the
> > Conservancy it does so without jeopardizing the tax exempt status of the
> > Conservancy (and, consequently, the status of all of the other projects
> > in the Conservancy).
> >
> > There is a 60 day notice requirement so that a new tax exempt non-profit
> > can be found for Evergreen to join.  If there isn't another fiscal
> > sponsor or other tax exempt non-profit to take over Evergreen, Evergreen
> > can incorporate as a separate entity and apply for tax exemption
> > recognition.  If there is no separate entity -- for example if a project
> > loses momentum and has been abandoned by its developers -- the
> > Conservancy must be left with the assets for use by the Conservancy for
> > other FLOSS-related charitable work.
> >
> > These restrictions would also apply to any separate tax exempt entity,
> > so if Evergreen were to incorporate and achieve tax exemption outside of
> > Conservancy, it would have to deal with the same considerations upon any
> > wind-up or distribution of assets.  Members of the Conservancy's board
> > are familiar with non-profit wind-down situations, and can assist in the
> > unlikely event that this unfortunate outcome occurs.
> >
> > Paragraph 9 - Miscellaneous
> >
> > These provisions are standard agreement boilerplate - they clarify the
> > enforceability of separate provisions, specify that the contract be
> > governed by New York Law and state that any amendments to this agreement
> > need to be agreed to in writing by all of the parties.
> >
> > Paragraph 10 - Counterparts/Facsimile
> >
> > Although it's good to have original signatures in the corporate records,
> > this allows you to simply scan a copy for the contract to take effect.
> >
> >
> > We hope this explanation document has made it clear why the agreement is
> > structured in this way.  If any provisions seem problematic to you, let
> > us know and we'll work with you to try to build an agreement that works
> > for both of us.  We look forward to Evergreen joining the Conservancy!
> >
> >
> > --
> > Bradley M. Kuhn, Executive Director, Software Freedom Conservancy
> >
>
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